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on Public Finance |
| By: | Cruces, Guillermo (University of Nottingham); Tortarolo, Dario (World Bank); Vazquez-Bare, Gonzalo (UC Santa Barbara) |
| Abstract: | This paper develops a framework to analyze partial population experiments, a generalization of the cluster experimental design where clusters are assigned to different treatment intensities. The framework allows for heterogeneity in cluster sizes and outcome distributions. The paper studies the large-sample behavior of OLS estimators and cluster-robust variance estimators and shows that (i) ignoring cluster heterogeneity may result in severely underpowered experiments and (ii) the clusterrobust variance estimator may be upward-biased when clusters are heterogeneous. The paper derives formulas for power, minimum detectable effects, and optimal cluster assignment probabilities. All the results apply to cluster experiments, a particular case of the framework. The paper sets up a potential outcomes framework to interpret the OLS estimands as causal effects. It implements the methods in a large-scale experiment to estimate the direct and spillover effects of a communication campaign on property tax compliance. The analysis reveals an increase in tax compliance among individuals directly targeted with the mailing, as well as compliance spillovers on untreated individuals in clusters with a high proportion of treated taxpayers. |
| Keywords: | cluster experiments, randomized controlled trials, spillovers, partial population experiments, two-stage designs, property tax, tax compliance |
| JEL: | C01 C93 H71 H71 H26 H26 H21 H21 O23 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17692 |
| By: | Sekumbo, Karia; Ringo, Noela; Manda, Constatine |
| Abstract: | The mobile money industry has conferred numerous benefits to consumers from all segments of income distribution. Given the rapid ascent of the industry, policymakers have grappled with its effective taxation. A key reason underlying this is a poor understanding of the distributional effects. This policy brief investigates a controversial tax that was instituted on mobile money withdrawals in Tanzania in 2021. Almost immediately after its introduction, transaction volumes across mobile money platforms plummeted. Tanzanian policymakers revised the tax multiple times before eventually removing it altogether. Given this U-turn, we investigate how the tax affects different consumer groups. Our findings revealed that salaried workers in urban areas as being more likely to reduce consumption of mobile money services. These results suggest that less wealthy respondents in rural areas with fewer substitutes were forced to contend with this tax while wealthier urban respondents substituted into different financial services. To relieve the rural poor of the onerous burden of this tax, we suggest revising the burden on wealthier segments to ensure that the incidence of taxation leaves them indifferent to contending with the tax as opposed to substituting into different financial services. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:aer:wpaper:f320982d-cd74-4343-b276-864a33b25103 |
| By: | World Bank Group |
| Keywords: | Macroeconomics and Economic Growth-Taxation & Subsidies Environment-Adaptation to Climate Change Environment-Natural Resources Management Environment-Green Issues |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:42615 |
| By: | Can, Zeynep Gizem (University of Galway); O'Donoghue, Cathal (National University of Ireland, Galway); Sologon, Denisa Maria (LISER (CEPS/INSTEAD)) |
| Abstract: | As middle income countries grow they see an increase in demand for energy. To avoid extreme climate change as these countries develop, there will be a need to decarbonise the increased energy consumption as they grow. We use the PRICES microsimulation model to examine the impact of carbon pricing across the income distribution in Türkiye. In particular we assess the joint distributional impact of combining both carbon taxation with revenue recycling. We evaluate both the relative performance of existing excise duties and additional carbon taxation. Despite the relative large change in the tax rate, replacing excise duties with carbon related excise duties has a relatively small distributional impact, with carbon taxes slightly less regressive than excised duties. Additional carbon taxes equivalent to €30 per tCO2 are regressive, increasing inequality. However we find that revenue recycling has a greater impact on inequality than the tax itself, with targeted instruments reducing inequality, while flatter instruments when combing with the carbon tax do not fully compensate for the increased inequality from the carbon tax. Although the carbon tax reduced emissions, revenue recycling mitigated this impact with a trade off between redistribution and emissions reduction. |
| Keywords: | carbon pricing, middle income countries, revenue recycling, microsimulation |
| JEL: | Q58 C15 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17701 |
| By: | Kiriga, Benson; Nato, Jacob; Remcho, Nathan; Eldrup, Magnus |
| Abstract: | This paper provides a high-level analysis of Kenyas tax system, examining structures, performance, and potential reforms to enhance domestic revenue mobilization for economic development. Synthesizing data from national agencies, we identify the central challenges facing the tax systems in Kenya including compliance levels, a significant informal sector, and economic shocks. Our analysis underscores the need for data-driven policymaking, emphasizing Kenyas Medium-Term Revenue Strategy (MTRS) 2024-2027, aimed at reversing declining tax-to-Gross Domestic Product (GDP) ratios through a comprehensive modernization of the public revenue system. Our study further highlights major revenue streams such as income taxes and value added tax to show how a few taxes make up a large portion of domestic revenues and the urgency for optimization within these taxes. The stagnant or declining performance of many tax structures in Kenya reveal a need for comprehensive reviews and updates that enhance progressivity, encourage compliance, and raise revenues relative to GDP. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:aer:wpaper:8051fe3a-63ff-4af7-962c-c592c90ac33b |
| By: | Kanina, Jane; Mugure, Josephine; Nato, Jacob; Urzainqui, David Garces; Fisker, Peter |
| Abstract: | This paper leverages administrative tax data from Kenya to make several contributions to our understanding of personal income taxation in developing countries. First, we exploit recent tax reforms to credibly estimate the elasticity of income to changes in marginal tax rates from a taxpayer panel with state-of-the-art methods, a novelty in the context of Sub-Saharan Africa. We find a value of 0.3 for our sample of individuals in the upper half but not at the top of the income distribution, which conceals large disparities between inelastic public workers and a rather elastic private sector. Second, we combine administrative tax data with household survey data to address the shortcomings of each of these data sources in measuring income inequality and assess the success of income taxes and potential modifications to them in reducing post-tax income inequality. We also triangulate these data sources to quantify the compliance gap due to compliance at 23% of potential revenue, mainly attributable to self-employed workers. Finally, we rely on these tools to investigate the possibilities Kenyan policymakers have and the trade-offs they face when aiming to collect further revenue in an efficient and progressive manner. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:aer:wpaper:0e0a5942-36ed-4bc3-8bf2-ff6c4950fb06 |